hello I have a question!

[yoyoNDHU]

Hello!
I run my mod file in dynare, and the result looks ok,
but why the result can't product the picture?
In fact there have warning for : Log of zero
But when I check I can't find where of the "Log of zero"

Can someone tell me where I got trouble..
Really thanks for your help!!

[jpfeifer]

You need either pruning or order=1 in stoch_simul. Otherwise your simulations used for IRF generation are explosive.

[vero_acurio]

Hello jpfeifer:

Do you how to explain why the IRF explose?

Best Regards,

Veronica

[jpfeifer]

Roughly speaking because approximations are only locally accurate and the quadratic terms introduced in second-order approximations tend to explode when shocks are large. Thus, a large shock might start a trajectory that leads you away from steady state. See the Kim, Kim, Schaumburg, Sims paper at http://ideas.repec.org/p/tuf/tuftec/0505.html

[vero_acurio]

Thank you so much!